Customer relationship management (CRM) refers to the practices that businesses use to manage customer data and handle interactions with current and prospective customers. "CRM" is commonly used in reference to CRM software—technology that helps businesses organize and analyze customer information, communicate with colleagues and customers, and manage sales workflows—all for the purpose of fostering better customer relationships.

CRM software tracks every interaction that a business has with a customer—from ad clicks and website visits to phone calls with salespeople—and makes this information readily available to employees, giving businesses a full 360-degree view of the customer story and allowing them to provide informed, personalized, and comprehensive service. CRM software also serves as a platform to effectively collaborate with colleagues using shared information, and it even provides automation tools to help salespeople get work done faster.

Centralized Information

CRM software provides a centralized database for customer information. Everyone in the company who deals with customers can access the same database and update information in the database as needed. Data is organized in the CRM to make it easy for users to find, add, or edit information.

When multiple employees work with a single customer, the employees share a unified record of every interaction between the customer and the company—including automated emails and follow-ups. This allows every employee to provide informed service without relying on customers or colleagues to explain or repeat information. In addition, work can continue even when one employee is absent.

Because data is automatically organized, customer interactions are shared, and the risk of duplicative work is minimized by using a CRM, better customer service outcomes become possible. This directly contributes to more sales (in overall volume), increased average order values (via upsells and repeat customer purchases), and increased customer lifetime value (CLV).

Furthermore, most CRM software also organizes information into reports to help businesses analyze sales and marketing performance. CRM reporting tools automatically collect data from sales, leads, and opportunity progression through the variety of customer experiences a business may offer. CRMs can instantly arrange this data into pivot tables, graphs, and spreadsheets, and organize the data by date, location, and much more. Since the data is sourced directly from the CRM database itself, it is guaranteed to be comprehensive and accurate, and every team has the same data to work with. Accurate data collection and data reporting are especially useful in today's digital landscape, where advertising and user privacy data have become increasingly complex to track, and lead attribution is often mixed or missing entirely.

Streamlined Workflow

Another huge benefit of using CRM software is that it automates administrative tasks—everything from following up with customers and scheduling meetings with colleagues, to sending confirmation emails and logging correspondence. Automating these tasks, or otherwise making them very easy to do, frees up employees' time to focus on other tasks and removes the costs and bureaucracy associated with administrative work.

In addition, CRMs are now using artificial intelligence (AI) to automate tasks like lead scoring, which helps salespeople decide which leads to prioritize based on probability scores that pull from a variety of factors. This type of intelligent automation helps people work faster and smarter, as the opportunities that have the highest chance of success are identified and pursued first.

Better Customer Relationships

CRM software provides built-in tools that help businesses find new customers and nurture existing relationships. Lead generation technology finds and records the contact information of prospective customers so that businesses can turn those prospects into new business opportunities. For example, Odoo generates leads from visits to a company website. Often, CRMs also integrate with marketing technology to track leads from marketing campaigns and to quickly identify quality prospects.

In addition to lead generation, CRM platforms are also built with lead nurturing tools—such as condition-specific autoresponders that immediately follow up with customers and prospects if they fulfill certain qualifying criteria, or activity scheduling to remind teams to follow up with active leads. Depending on the particular software, CRMs may also provide tools for salespeople to quickly create and send quotations, invoices, and other essential documents to customers—such as quotation templates, draft invoices, and subscription plans

Improved Financial Outcomes

CRM software is statistically proven to benefit businesses financially. In 2014, the average return on investment (ROI) on CRM technology was $8.71 for each dollar spent [3]. And this number has certainly increased since then with continual developments in CRM technology that have made the software more robust and capable—such as embedded analytics and AI-powered features.

In addition, CRM applications have been shown to help businesses increase sales by up to 29% and increase sales productivity by up to 34% [4]. With a CRM, salespeople can keep track of every lead, scheduled call, and client customization, and companies that use CRM systems have benefited from a 17% increase in lead conversions and a 16% boost in customer retention [5]. These companies have also seen a 21% improvement in productivity for individual employees [5]. CRM software often integrates with email, VoIP, messaging apps, and other communication systems, and offers numerous automation features, all of which improve productivity. Finally, CRM software provides a centralized and accessible database for company information, and it has been shown that data accessibility shortens the sales cycle by an average of 8-14% [6].

CRM Software Market Analysis

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